Six EU Hydrogen Bank projects sign contracts, potential for sub €3/kg RFNBO

• Iberia holds four of six projects
• ICIS data shows product costs could drop to sub €3/kg with subsidy
• Projects must commence operations in five years

LONDON (ICIS)–On 7 October the European Commission announced it had signed grant agreements with six renewable hydrogen production projects as part of the EU Hydrogen Bank scheme, indicating that one of the original seven winners of funding had withdrawn. ICIS data shows project costs could result in hydrogen below €3/kg as a result of the support.

From the point of signing contracts, the five projects will need to commence hydrogen production within five years, indicating that their supply would be online before 2030, the year 42% of all hydrogen used in industry must be renewable fuels of non-biological origin (RFNBO) according to the renewable energy directive.

The total production from the six projects will amount to roughly 1.5 million tonnes of hydrogen over the entire 10-year period covered by the EU Hydrogen Bank process, meaning that at least 150kt/year of RFNBO will be produced by the scheme by 2030.

Companies bid on a €/kg basis for support, meaning for every kilo produced by the projects, a subsidy would be paid to the bid amount, thus reducing the potential sales price for the projects to RFNBO buyers.

Bids ranged from €0.37-0.48/kg of RFNBO. The support was designed to bridge the gap between RFNBO and conventional high emissions hydrogen.

ICIS understands that current RFNBO sales prices for around 2029 can reach up to €15/kg, with some producers citing production costs in the single figures.

ICIS Hydrogen Foresight project data for Spanish electrolysers indicates that, following the subsidy, product costs from the Catalina and HYSENCIA projects respectively could fall to €2.73/kg and €3.11/kg.

The project to withdraw from the scheme was the El Alamillo H2 project, coordinated by Benbros Energy S.L. The project had bid for support of €0.38/kg, the second-lowest bid level of the seven successful bidders.